If a tourist buys something in New Zealand for export or that they don’t take possession of within New Zealand, they can get a GST refund on it. Most tourists don’t know this and it’s only relevant in exceptional circumstances, not for the kind of purchases that most tourists make while here. Cameron Brewer from the Newmarket Business Association wants us to make it easier for tourists to get GST refunds on a whole range of purchases.
So, basically Brewer wants the New Zealand government to run a system to give tourists money as they leave the country. Why is that in the country’s interest? Why is it worth the expense? All it does is take money out of our government’s coffers and give it to tourists who are on their way out of the country.
Brewer says that when Australia introduced an easy system for GST refunds in 2000 tourist spending in the country jumped 8.5% that year. He seems to think this was caused by the refund system. That’s dumb. 8.5% is a typical year’s increase that can be totally accounted for by increased tourist numbers, increased tourist wealth, and inflation. It has nothing to do with GST refunds.
Brewer also claims “most New Zealanders have experienced” the Aussie system, which is ridiculous. Most Kiwis haven’t been to Aussie in the last decade, and few that have would have bought a good worth over $300 and had the receipt ready when they left the country to get the refund if they even knew about it. It’s just a bonus for rich tourists. Some money back in the pocket when they’re already leaving the country.
Brewer seems to think that if tourists get a GST refund when they’re leaving New Zealand, they’ll spend more money earlier, in the country. Why he thinks that would happen, and why he thinks that is good I don’t know. Even if the tourists were to spend all their GST refunds in NZ before receiving those refunds (which is patently absurd) the country would just be worse off – we will have given the tourists more goods and services in exchange for the same amount of money entering our economy.
Finally, there’s this sentence, which sums up the intelligence of the man:
“Suddenly in the eyes of tourists every piece of New Zealand jewellery, sizeable artwork, or designer fashion garment is effectively 12.5 per cent cheaper”
No it’s not you drop-kick. GST is one-eighth on, one-ninth off. GST adds 12.% to the purchase price, so a GST refund takes 11.1% off the price. This munter is head of the Newmarket Business Association, remember, and he doesn’t even understand how GST works.